Knowledge Gaps

A well-functioning power market should ensure that resources are allocated optimally in the short-and long run including considerations of security of supply. Traditionally, time horizons of physical power markets range from the energy only day-ahead, intraday to real-time balancing markets that price scarcity. This is increasingly under scrutiny since short-run price signals lead to long-run price expectations which must adequately incentivize efficient investment decisions. If energy and ancillary price formation during tight supply and other stressed conditions do not rise high enough to reflect the scarcity value of generation no investment takes place. Possible reasons leading to such a situation can be price caps, limited demand‐side participation in the wholesale market, and out‐of‐market actions by system operators during network security emergencies.

While the short-term resource allocation is in focus in this project, long-term effects need to be understood and analysed. A higher share of renewables with zero marginal cost in the electricity generation mix increases the need for resources that can provide flexibility, back-up capacity and system services, while the shortcomings of the market design remain. Some of the often-mentioned measures to remedy this are capacity markets, flexibility markets or new scarcity pricing mechanisms. Flexibility in this setting could be different products like inertia, ramping, reactive power or voltage. It can be delivered from the supply side (e.g. hydropower, wind, solar, and conventional power plants), storage (e.g. batteries) or the demand side (e.g. industrial or household demand response).

Regarding geographical (spatial) resolution and organization the existing literature focuses on energy-only markets. Typically, there are two approaches:

– Zonal markets where all locations in a zone see a single price and import/export capacities exist between zones.

– Nodal markets where each node in the network sees a separate price and the physical capacity between nodes are represented. In addition, there are variations and hybrids.

Another crucial issue in allocation of short-term resources is how the time dimension affects pricing. There is a rich literature on multimarket bidding considering bids with different time resolution and time of delivery (day-ahead, intra-day and balancing services). Also, there is recent work on multimarket allocation for demand side flexibility, for example considering option markets, day-ahead markets and balancing markets simultaneously. Most of these approaches address market clearing where dispatch happens to clear the spot price, and re-dispatch happens in real-time to ensure balance and security of supply. Novel approaches suggest stochastic and distributed power market clearing, where these two time dimensions are considered simultaneously.

The ambition of the Energy Union is that energy should be able to flow with as little obstruction as possible between countries. There are several initiatives to promote the same type of cross-border cooperation for system services (e.g. PCR & Euphemia, Picasso & aFRR, MARI & mFRR). While the knowledge gaps identified above clearly are made even more complicated in this setting, also a number of new issues arise regarding the digital platforms that need to be developed to support this interaction at market level. The European Commission is promoting to have an active demand side with the consumers providing flexibility in power markets. This raises a number of issues in addition to the ones above. While the concepts of flexibility are not discussed in detail, there is a clear suggestion that the work-sharing and division of roles between the TSO and the DSO would move in a direction where more of the problems are solved locally. Another example would be to do internal congestion management via local energy communities that manage bottlenecks in the distribution grid.

Publications

Here you will find access to public documentation developed throughout the PowerDig project.

Peer-Reviewed Papers

Flexibility Characterization, Aggregation, and Market Design Trends with a High Share of Renewables: a Review

NTNU; SINTEF

See Publication

Digital Energy Platforms Considering Digital Privacy and Security by Design Principles

NTNU; ODU

See Publication

Consequences of Uncertainty from Intraday Operations to a Capacity Expansion Model of the European Power System

NTNU; SINTEF

See Publication

Value stacking flexibility services in neighborhoods participating in fast frequency reserve markets

NTNU; SINTEF

See Publication

Flexibility Characterization, Aggregation, and Market Design Trends with a High Share of Renewables: a Review

NTNU; SINTEF

See Publication

Effects of end-user participation under a TSO-DSO coordination scheme for Norway

NTNU

See Publication

Dynamic Zonal Flexibility Markets for Congestion Management: Optimising distribution grid capacity

NTNU; UNIOVI

See Publication

TSO-DSO Coordination under Wind and Solar Power Uncertainty: A Two-Stage Stochastic Programming Approach

NTNU

Congestion Management Based on Power-to-Gas Opportunities and Challenges in European Electricity Markets

NTNU; TU Berlin

MSc/PhD Thesis (ongoing or completed)

Designing a Zonal Flexibility Market and Modelling Strategic Behaviour in Combination with the Intraday Market: Combining Optimization and Machine Learning Approaches

MSc Thesis
Aasvær, Victor Sætre; Ryssdal, Anders Strand

See Publication

A Novel Flexibility Market: Leveraging Distributed Energy Resources to Balance Wind Power Forecast Errors

MSc Thesis
Rognes, Henrik

See Publication

A bilevel model to study the market power of a strategic wind power producer in the Norwegian discrete intraday market

Ongoing MSc Thesis
Ter Laak, Wessel

Implementing Low-Emission Hydrogen in Norway: A Techno-Economic Analysis of Production, Investments, and Interplay with the Power System

Ongoing MSc Thesis
Svendsmark, Erik

Short Term Electricity Markets – Operation and Design under Uncertainty

Ongoing PhD Thesis
Seifert, Paul

The roles and impacts of active end-users and DSOs during the transition towards smart distribution grids

Ongoing PhD Thesis
Yen, Dung Bai

Dissemination

Here you will find our different dissemination activities developed throughout the PowerDig project.

Modeling Intraday Trading in Norwegian Power Market

Presented at: Power Market Workshop, Energy Transition Week 2024, Trondheim, Norway.

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Optimising distribution grid capacity

Presented at: Increasing Distribution Network Hosting Capacity Workshop, CIRED 2024, Vienna, Austria.

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